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The McKinsey 7S Framework is a management model developed by business consultants Robert H. Waterman, Jr. and
Tom Peters Thomas J. Peters (born November 7, 1942), an American writer on business management , business-management practices, became best-known for his 1982 book ''In Search of Excellence'' (co-authored with Robert H. Waterman Jr.) Life and education ...
(who also developed the MBWA-- "
Management By Walking Around The management by wandering around (MBWA), also management by walking around,"What is management by walking around (MBWA)", BusinessDictionary.com, 2010, webpage: . refers to a style of business management which involves managers wandering aroun ...
" motif, and authored ''In Search of Excellence'') in the 1980s. This was a strategic vision for groups, to include businesses,
business unit A strategic business unit (SBU) in business strategic management, is a profit center which focuses on product offering and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and marketing campaign, even thoug ...
s, and teams. The 7 S's are structure, strategy, systems, skills, style, staff and shared values. The model is most often used as an organizational analysis tool to assess and monitor changes in the internal situation of an organization. The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change. Whatever the type of change – restructuring, new processes, organizational merger, new systems, change of leadership, and so on – the model can be used to understand how the organizational elements are interrelated, and so ensure that the wider impact of changes made in one area is taken into consideration.


History

In 1977, McKinsey director Ron Daniel launched two projects. The first and major one, the Business Strategy project, was allocated to top consultants at McKinsey's New York City headquarters and was given significant resources. It was headed by Frederick Gluck, and despite promise, the project could not manage to effectively implement the new strategies. The second project was related to the problem of implementation: organizational effectiveness. This project was headed by Cleveland-based James Bennet. Peters states that directly after graduating with a PhD from Stanford and returning to McKinsey, Daniel handed him a "fascinating assignment." Motivated by the new ideas coming from Bruce Henderson's
Boston Consulting Group Boston Consulting Group, Inc. (BCG) is an American global management consulting firm founded in 1963 and headquartered in Boston, Massachusetts. It is one of the "Big Three (management consultancies), Big Three" (or MBB, the world's three large ...
, Peters "was asked y Danielto look at 'organization effectiveness' and 'implementation issues' in an inconsequential offshoot project nested in McKinsey's rather offbeat San Francisco office." While Daniel's first project was focused on Business Strategy, this second project was concerned with "Organization" which Peters defined as involving "the structure-and-people side." The "Organization" project was seen by Peters to be less important, according to Peters in a ''Fast Company'' interview. Despite being described as "marginal," the project "had an infinite travel budget that allowed etersto fly first-class and stay at top-notch hotels, and a license from McKinsey to talk to as many cool people as ecould all around the United States and the world." Peters admits that "There was no carefully designed work plan. There was no theory that I was out to prove. I went out and talked to genuinely smart, remarkably interesting, first-rate people." In addition to Karl Weick and Einar Thorsrud, Peters notes that
Douglas McGregor Douglas Murray McGregor (September 6, 1906 – October 1, 1964) was an American management professor at the MIT Sloan School of Management and president of Antioch College from 1948 to 1954. He also taught at the Indian Institute of Management Ca ...
's theory of motivation, known as Theory X and Theory Y, was directly influential on the direction of the project. In a 1978 article, "Symbols, Patterns and Settings," Peters argued that "shifting organizational structure" and "inventing new processes" – structure and system, respectively – were only two tools of organizational change. Peters then outlined eight "mundane" tools that every manager has at their fingertips. He described this article as a "tentative presentation" and "the first public expression of these ideas." In 1979, McKinsey's
Munich Munich is the capital and most populous city of Bavaria, Germany. As of 30 November 2024, its population was 1,604,384, making it the third-largest city in Germany after Berlin and Hamburg. Munich is the largest city in Germany that is no ...
office requested Peters to present his findings to
Siemens Siemens AG ( ) is a German multinational technology conglomerate. It is focused on industrial automation, building automation, rail transport and health technology. Siemens is the largest engineering company in Europe, and holds the positi ...
. That provided the spur for Peters to create a 700-slide two-day presentation. Word of the meeting reached the US and Peters was invited to present also to
PepsiCo PepsiCo, Inc. is an American multinational corporation, multinational food, snack, and beverage corporation headquartered in Harrison, New York, in the hamlet of Purchase, New York, Purchase. PepsiCo's business encompasses all aspects of the f ...
. However, unlike the hyper-organised Siemens, the PepsiCo management required a tighter format than 700 slides, so
Tom Peters Thomas J. Peters (born November 7, 1942), an American writer on business management , business-management practices, became best-known for his 1982 book ''In Search of Excellence'' (co-authored with Robert H. Waterman Jr.) Life and education ...
consolidated the presentation into eight themes. Each of these eight would form a chapter of ''In Search of Excellence''. In 1980, Waterman joined Peters, and, along with Waterman's friend Tony Athos and Richard Pascale – both academics – came together at a two-day retreat in San Francisco to develop what would become known as the 7S Framework, the same framework that would organize ''In Search of Excellence''. In June 1980, Peters published an op-ed in the ''Manager's Journal'' section of the ''
Wall Street Journal ''The Wall Street Journal'' (''WSJ''), also referred to simply as the ''Journal,'' is an American newspaper based in New York City. The newspaper provides extensive coverage of news, especially business and finance. It operates on a subscriptio ...
'' titled "The Planning Fetish." In this article, he "stressed the importance of execution and dismissed the whole idea of strategy." As strategy was McKinsey's main operation at the time, this was seen as a "frontal assault" on the company, leading Mike Bulkin, the head of the New York office, to demand that Daniel fire Peters. The primary "innovative" theme that undergirded what would become the well-known book ''In Search of Excellence'' book was that "structure is not organization." This also happened to be the title of a 1980 journal article authored by Bob Waterman, Tom Peters, and Julien Phillips in which they argue that the "picture of the thing is not the thing.... An organizational structure is not an organization." This article also introduced what would become the McKinsey 7S Framework.


''In Search of Excellence''

The work of Peters, Waterman, Athos, and Pascale leading up to the widely successful ''
In Search of Excellence ''In Search of Excellence'' is a book written by Tom Peters and Robert H. Waterman Jr. First published in 1982, it sold three million copies in its first four years, and was the most widely held monograph in the United States from 1989 to 2006. T ...
'', not only elaborated the eight themes that would form each chapter, but also the 7 S's frame the different ways in which the firms profiled in the book were "excellent."


''The Art of Japanese Management''

Athos and Pascale, although not named as co-authors of the 1982 publication of ''In Search of Excellence'', published their own study in a 1981 book titled ''The Art of Japanese Management''. This book used the 7S Framework to compare the Japanese firm Matsushita with the American company ITT. Just as Peters emphasized throughout his writing, the important distinction between American and Japanese management was not the so-called "hard" technical aspects of organization, but rather the "soft" cultural aspects.


Objective

To analyze how well an organization is positioned to achieve its intended objective. Usage * Improve the performance of a company * Examine the likely effects of future changes within a company * Align departments and processes during a merger or acquisition * Determine how best to implement a proposed strategy The Seven Interdependent Elements * The basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful ''Hard Elements'' * Strategy - Strategy is defined as the set of actions that a firm plans in response or anticipation of changes to its external environment. These actions allow a firm to improve its competitive positioning. Purpose of the business and the way the organization seeks to enhance its competitive advantage. * Structure – Structure allow the firm to focus on areas that are deemed important for its evolution. This includes division of activities; integration and coordination mechanisms. * Systems – These include formal and informal procedures for measurement, reward and resource allocation. ''Soft Elements'' * Shared Values – These values define the firm's key beliefs and aspirations that form the core of its corporate culture. Shared values are considered central because they influence and shape the organisation's culture, impacting how individuals within the organisation behave and make decisions. * Skills – The organization's core competencies and distinctive capabilities. It is argued that old skills can often act as hindrance in developing new skills. * Staff – Staff considers people as a pool of resources, which need to be nurtured, developed, guarded, and allocated. It includes organization's human resources, demographic, educational and attitudinal characteristics. * Style – Typical behaviour patterns of key groups, such as CEOs, managers, and other professionals.


References


External links

{{Commons category, McKinsey 7S framework
Structure is Not Organization
-''Business Horizons'', June 1980. Management frameworks McKinsey & Company